Banks seen relying more on wholesale funding

GIVEN shrinking deposits from a quarter ago, the three homegrown lenders are expected to rely more on the wholesale market to fund their operations, a Credit Suisse report said. And this makes the banks more vulnerable when liquidity dries up, as seen during the global financial crisis.

The comment comes as the loan-deposit (LDR) ratio in Singapore dollars of United Overseas Bank (UOB) hit 100 per cent in the second quarter - simply put, a dollar from deposits funds a dollar of loans. The LDR ratio is one way to show the extent banks can keep up with the pace that they grow their loan book.

The Sing-dollar LDR ratio for DBS and OCBC stood at 77 per cent and 82 per cent respectively. DBS has the largest Sing-dollar deposit base of S$136 billion as at June this year. This is followed by UOB's S$106 billion, and OCBC's S$91.7 billion.